The Flap At Buffalo Wild Wings: Hedge Fund Wants Big Changes

By Johanna Bennett

The San Francisco hedge fund, which has a 5.2% stake in Buffalo Wild Wings, sent a letter to Chairman James Damian that criticized capital deployment and accused the company of a “tendency to favor gut feel and thematic proclamations” that lack “tangible evidence or appropriate analytical support,” according to a report by Wall Street Journal.

Marcato also cited a “lackluster analyst day presentation and observable discontent among shareholders and research analysts.”

Investors were enthusiastic. Shares of Buffalo Wild Wings jumped more than 2% to $164.65.

None of Marcato’s concerns are news. Barron’s reported in late July that the hedge fund was in discussions with Buffalo Wild Wing’s regarding, among other things, capital structure and capital allocation, and optimizing the mix of franchised versus company-operated stores.

Marcato isn’t the only investor unimpressed with the investor day meeting that took place Monday. Buffalo’s management discussed efforts to regain positive same-store sales growth, but “everyone left a little hungry,” says Deutsche Bank’s Brett Levy. As he writes:.”

We believe the biggest positives were increased leverage/capital returns to shareholders and details on its sales, marketing and expansion plans, while the lack of a CFO announcement or re-franchising were modest negatives. BWLD offered initiatives to drive a sales rebound although macro uncertainty and ongoing execution challenges are enough to keep us sidelined with a Hold rating, but new $155 PT

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AUGUST 18, 2016 12:06 P.M.

Mary Tracy wrote:

Never trust these hedge fund "experts." The data shows that hedge funds under-perform the S&P over time. Warren Buffett knows it. He made a million dollar bet with one of these hedge fund wise-guys and is about to collect.

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